The U.S. Department of Justice has settled a lawsuit it filed against the Mortgage Guaranty Insurance Corporation charging the company discriminated against women on maternity leave who were seeking mortgages.
The lawsuit alleged MGIC required women on maternity leave to return to work before the company would insure their mortgages even for women who had a guaranteed right to return to work after the leave.
Most mortgage lenders require applicants seeking to borrow more than 80% of their home’s value to obtain mortgage insurance.
The settlement sets up a $511,250 fund to compensate 70 people who applied for MGIC-insured loans between 2007 and 2010.
MGIC also agreed to pay a $38,750 civil penalty to the United States.
Going forward, MGIC said it would follow Fair Housing Act rules when underwriting mortgage insurance applications involving women or men who are on, or have returned from, paid or unpaid leave related to the birth, adoption, or foster care placement of a child.
“No company involved in lending should force a parent to give up her or his legal right to take time off from work to care for a new child in order to obtain a mortgage loan,” said Thomas E. Perez, assistant attorney general for the Justice Department’s Civil Rights Division
This lawsuit arose as a result of a complaint filed with the U.S. Department of Housing and Urban Development by a Wexford, Penn., loan applicant.
After investigating the complaint, HUD issued a charge of discrimination and referred the case to the Department of Justice after the parties were unable to settle their dispute and the complainant elected to have the case heard in federal court.
The Department of Justice also filed the case under the attorney general’s authority to seek redress for housing discrimination that raises an issue of general public importance.
The HUD complainant will receive $42,500 from the settlement fund, to address her specific pain and suffering and compensate her for leave that she forfeited in response to MGIC’s requirement that she return to work.
Individuals compensated as part of the settlement will remain eligible to receive compensation from the separate private class action lawsuit brought by the HUD complainant.
MGIC has entered into a preliminary settlement of the class action lawsuit, which remains subject to court approval, allowing victims of MGIC’s alleged maternity leave discrimination to submit claims for extraordinary damages above the amount covered by the compensation provided through MGIC’s settlement with the United States.
The federal Fair Housing Act prohibits discrimination in housing and mortgage lending based on race, color, religion, national origin, sex, disability, and familial status.
Individuals who believe that they may have been victims of housing or lending discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at firstname.lastname@example.org, or contact HUD at 1-800-669-9777.
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